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Contents
List of Sidebars
List of Figures and Tables
Preface
Notes
Index
Sidebars
F I G UR E S
2.1. An income transfer project creates both direct and indirect income
effects
4.1. The poverty line
4.2. An asset recursion function with a poverty trap
5.1. Frequency distributions of income for Albania, Nicaragua, Tanzania,
and Vietnam
5.2. Decile frequency distributions of income for Mexico and Sweden
5.3. Ranking of population from poorest to richest
5.4. The Lorenz curve
5.5. Intersecting Lorenz curves
6.1. The HDI increases sharply with per capita income and then tapers off
6.2. The classic “MVPL = w” rule
6.3. The costs and benefits of going to secondary school for girls and
boys in rural Lesotho
6.4 . Life expectancy at birth rises sharply with per capita income
7.1. The firm’s output (Q) increases with labor inputs (L) but at a
decreasing rate
7.2. Aggregate production per worker (y) increases with capital per
worker (k) but at a decreasing rate
7.3. Savings per worker is output per worker times the savings rate, s
7.4 . A is the steady-state income and capital per worker in the economy
7.5. An increase in the savings rate leads the economy to a higher steady-
state capital-labor ratio and income per worker
7.6. An increase in the labor-force growth or depreciation rate takes the
economy to a lower steady-state income and capital per worker
7.7. As productivity in the economy increases, the steady-state capital and
output per worker rises from point A to B to C
7.8. Average household savings rates vary widely across countries
7.9. Real monthly wages in China and Mexico converged between 1996
and 2008
7.10. Illustration of a regression of variable Y on X
7.11. No significant relationship between initial (1900) per capita income
and country growth rates between 1990 and 2010
8.1. Responses of undergraduates at UC Davis to the question, “How
entrepreneurial are ____?”
9.1. There is a positive association between countries’ agricultural and
non-agricultural economic growth
9.2. The household as consumer optimizes at the point of tangency
between the indifference curve and budget constraint
9.3. In the consumer model, a rise in the price of food triggers substitution
and real income effects that reinforce one another
9.4 . The farm household produces at the point where the food price equals
the marginal cost of producing food
9.5. The farm profit effect shifts out the budget constraint, possibly
resulting in a positive effect of food prices on the household’s food
demand
9.6. Technological change can shift the agricultural supply curve outward
9.7. A liquidity constraint (segment EH) can result in suboptimal
production and a welfare loss
9.8. Concave production possibilities frontier (PPF)
9.9. Markets enable the household to increase its welfare by separating its
production and consumption decisions
10.1. Changes in per capita GDP and agriculture’s share of employment,
1990–2005
10.2. The Lewis model
11.1. Equilibrium in the village berry market without trade
11.2. The regional price is higher than the village price
11.3. Transaction costs cut producers off from higher prices in outside
markets
12.1. Consumption smoothing seeks to break the connection between
consumption and income and keep households above their subsistence
minimum even in bad years
13.1. World food prices are increasing and becoming more volatile
13.2. With trade, the consumer surplus equals the sum of areas a + b + c + d
13.3. With an import tariff, consumers lose a + b + c + d, government gains
c, producers gain a, and there is a deadweight loss of b + d
13.4 . A very high tariff can drive an economy into self-sufficiency,
producing a deadweight loss of b + c
13.5. China, Tunisia, South Africa, and India achieved rapid income growth
after opening up to trade; Zimbabwe, which followed import-
substitution policies, saw its per capita income decline
13.6. Per capita income growth in South and North Korea, 1950–2002
13.7. Mexico’s trade with the United States increased after NAFTA took
effect on January 1, 1994
13.8. Foreign direct investment inflows to low- and middle-income
countries have increased sharply in the new millennium
13.9. Total world remittance receipts have increased sharply since 1970
TAB LES
The RebelText alternative textbook project was launched at the Taylor dinner
table one night in fall 2012. Ed had just told the campus bookstore to order up
125 copies of an undergraduate econometrics textbook at $150 a shot. (That’s
a gross of $18,750 just from one class.) Over dinner that night, Ed’s twenty-
year-old son, Sebastian, announced that he had spent $180 (of his parents’
money) on a new edition calculus text required for his course. Sebastian’s little
brother, Julian, exclaimed, “That’s obscene!” Sebastian responded, “You’re
right. Basic calculus hasn’t changed in decades. You don’t need new editions to
learn calculus.”
Before dinner was over, Ed’s two kids had ambushed him and made him
promise never, ever, to assign an expensive textbook to his students again.
“So, what do you want me to do then, write one?” Ed asked them.
“Exactly,” they answered in unison.
“And get a good title for it,” Ed’s wife, Peri, added.
The first RebelText creation was Essentials of Econometrics, with Aaron
Smith and Abbie Turiansky. That seemed like a big enough project, but then Ed
was assigned to teach a 350-student undergraduate development economics
course. Naturally, he felt he had to write a book for that one, too. Travis
climbed on board. That’s how Essentials of Development Economics became
the second member of the RebelText line.
What’s RebelText? It’s a textbook series designed to be affordable, compact,
and concisely written for a new generation that is more at ease “Googling”
than wading through big textbooks. Being both more affordable and compact,
it’s easier to carry around. Write in it. Don’t worry about keeping the pages
clean or whether there will be a market for your edition later, because at this
price there’s no need to resell it after the class is through. RebelText will
naturally evolve as needed to keep pace with the field, but there will never,
ever, be a new edition just for profits’ sake.
In 2014, RebelText and UC Press struck an alliance. This UC Press edition
offers readers a more complete coverage of what we see as the essentials of
development economics than the original print-on-demand edition, while
keeping the book affordable and compact. Through our new partnership with
UC Press, we hope to turn RebelText into a better and higher impact alternative
textbook initiative in a world that we all believe is in desperate need of
textbook reform.
There is particularly a need for a new undergraduate development
economics textbook. The books out there seem more interested in
summarizing a bunch of topics than in teaching people what they really need to
know in order to do development economics. This book is different.
WHO SHOULD USE T HIS BOOK AND HOW
RebelText would not exist if it weren’t for our families and students. Special
thanks go to Sebastian and Julian, who shamed Ed into launching RebelText; to
Peri, who has supported this project from the start; to Heather, Hannah, and
Rockwell, who fully embraced the adventurous sabbatical year in Ghana that
gave Travis the professional breathing room to work on this book; to
colleagues at the Economics Department of the University of Cape Coast who
made Travis’s sabbatical year possible; to Steve Boucher and Michael Carter
for providing many thoughts, inputs, and field tests of our book in the
classroom; and to our cutting-edge team of graduate student assistants,
including Anil Barghava, Isabel Call, Michael Castelhano, Diane Charlton,
Mateusz Filipski, Justin Kagin, Dale Manning, Karen Thome, and Abbie
Turiansky, all of whom provided valuable research assistance and advice at
various stages of this project. Finally, we thank the many undergraduate
students who kept us going by repeatedly telling us how “awesome” RebelText
was and for catching errors and typos. They, too, are part of this project.
J. Edward Taylor and Travis J. Lybbert
Davis and Berkeley, California
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“That means, little dog,” she told him, “that you will have to stay at
home.”
She searched the hurt member to make sure that the thorns were
all out.
“Yes”—she was still bent over Patsy’s foot as she answered her
father’s remark—“he is likable.... There, Patsy, don’t make a fuss.”
She bound up the paw in her handkerchief.
“I do not know that he puzzled me,” she went on, straightening up.
“I thought he seemed rather lonely, though.”
“He’s not likely to be that, long,” was Anderson’s reply. “It’s a
thundering pity, too. I understand he’s in deep with that Hallard
woman, though I’ve tried not to believe it. She don’t seem his kind. I
asked him to come here again,” he went on, a little ruefully; “and yet
I’m not sure I meant it.”
“What kind of woman is this Mrs. Hallard, Father?” Helen
regarded her father now, with interest in her level grey eyes.
“Why,” Anderson said, doubtfully. “She’s not the kind I should
think would catch him. It’s a case of catch, all right, though, I guess;
even Westcott seemed to know about it.”
He considered a moment, frowning.
“She’s loud, and coarse, I suppose; but she’s a mighty handsome
woman, if a man don’t care about some other things. And I somehow
should think Gard would. I like a different sort, myself.”
He glanced proudly at the figure beside him. Helen was in her
riding-habit, waiting for her horse to be brought round.
“But she—she’s only a rough kind, is all you mean, isn’t it?” Her
face flushed, ever so little.
“Oh, Kate Hallard’s a decent sort, all right enough, I dare say,”
Anderson hastened to answer. “Of course there’s always talk. I’ve
heard some myself, but I discounted it. In the first place, she’s hard
as nails. No nonsense about her. Not her. Her tongue ’s tipped with
vitriol, and when she opens her mouth the men catch it.” Anderson
shrugged his shoulder a trifle.
“And then, of course,” said he, “There’s no telling about Gard. He
may be a little more attracted than he might want to be, and yet have
strength enough to pull out of it and get away.”
“I should call that being weak, if he cared!” cried Helen,
indignantly.
“Oh, I don’t know.” Her father took Dickens’ bridle-rein from the
puncher who had brought the pony up.
“It all depends upon how a man looks at some things,” he said,
throwing the reins into place.
Helen took them and prepared to mount, a hand on the cantel.
“The one thing I don’t like about this way of riding,” said
Anderson, “is that it curtails our privileges. You don’t need helping
on.”
Helen sprang to the saddle, adjusting herself with a little shake.
“’Twould only hinder,” said she, smiling, “like every other help we
don’t need.”
She flushed suddenly, as she realized that she was quoting a saying
of Gard’s.
“You keep Patsy here, won’t you?” she called as she rode away,
leaving her father looking after her with an expression half proud,
half wistful and wholly tender.
“She’s clean grown up,” said he, to himself, as he stooped and
snapped the leash into Patsy’s collar.
“The bonnie thing! Lord! How I wish her mother was alive!”
He stood staring out upon the sun-washed desert, wide, silent,
baffling, and spoke the yearning thought of his heart.
“I don’t know how to be a mother to her, and she’s sure going to
need one. Lord, Lord!” He cast a comprehensive glance over the
fierce, brilliant landscape. “This is an all-right country for men and
burros,” he said, with a half-whimsical sigh, “but it’s a mighty hard
one for women and horses!”
Helen had promised Jacinta to ride as far as Old Joe Papago’s, to
see Mrs. Old Joe about a young Indian girl who was to come and help
Jacinta with the work of the casa. Old Joe was better off, financially,
than any other Papago in the section, and his wife, who was reputed
to have some Spanish blood, exercised a sort of guardianship over
the women and young girls of their settlement. This latter was only
three or four miles distant, and there was a slight ting in the
December air that quickened Dickens’ nerves, and made him ready
for a frolic, but Helen was in no mood to gratify him. She ignored all
his invitations to run, and kept him to the slow little walk of the
bronco.
He hated it and fretted under the steady rein; but for once Helen
did not heed him. She was going over in her mind the events of the
past five days. Westcott, in the brief space of his hour with her, had
sought to sow the seeds of doubt of Gard in her mind. He had spoken
vaguely of certain tricky games that the stranger was trying to play
upon him, and an imagination less pure than the girl’s might have
inferred much from the subtle little that he let fall regarding Kate
Hallard.
The carefully chosen seed, however, had found no favoring soil—
no fostering care. Helen was herself of too true and sturdy a fiber to
doubt the truth and the stability of Gard’s nature. She dismissed,
with hardly a thought, the suggestion of trickery on his part, and the
other poisoned arrows wholly missed their intended mark.
“There’s a lot of ways of thinking about any one thing,” Gard had
said one day, as they talked out long, long thoughts of life, and right,
“But a man—he’s got to follow the straightest path he sees; for he’s
got to live so he can like himself, and care to be with himself.”
Yes: that was what he would do, without fail. He saw straight, and
he would follow the straight path. Oh! It was good to feel trust in
one’s friends! Something of the peace and serenity that Gard himself
had won out of solitude and despair fell upon her spirit at thought of
his clear vision, and steady holding of the right.
Yet her heart was heavy. She told herself that this was because she
feared for the ultimate happiness of one friend. She remembered her
father’s words about Mrs. Hallard: “coarse; hard; her tongue tipped
with vitriol.” Surely they must be unjust, or this man, who was fine
and true, would not care. He could not care. Perhaps he would come
to see before it was too late, and would “pull out and get away.” But
no: that he would not do. His was a steadfast nature; of that she was
sure!
Before Old Joe Papago’s door, reins dropped to the sand, stood a
stout roan horse, and leaning against the door-post, talking to Mrs.
Old Joe, was a woman dressed in khaki. It needed but a single glance
to tell Helen who it was.
The blonde head turned as the girl rode up, and the big black eyes
surveyed her comprehensively, but there was no sign of recognition
in the hard, impassive face. Mrs. Old Joe grunted a response to
Helen’s greeting, and the latter dismounted.
Acting upon a sudden impulse she came close to the woman by the
doorway.
“Good-morning,” she said, simply, holding out her hand. “This is
Mrs. Hallard, isn’t it? I am Helen Anderson.”
“Pleased to meet you,” Mrs. Hallard said, apparently not seeing the
outstretched hand. Kate Hallard had no mind to be patronized: but
she studied the girl’s face, stealthily, and the bold eyes grew a shade
softer.
She did not know that Gard had left the Palo Verde that morning.
Westcott, who had tried hard to come to some sort of terms with her,
in the other man’s absence, had told her that the latter would
probably let himself be detained at the rancho for a fortnight, at
least. He had drawn a vivid picture of Gard making the most of this
opportunity to win a way into Miss Anderson’s good graces. The
lawyer’s methods had been primitive. He sought to play upon the
woman’s presumable capacity for jealousy, and thus set her against
Gard.
He might have saved himself the mental wear and tear. Kate
Hallard was not a fool; nor a devotee of the heart-complication
school of fiction. She held no illusions about Gard’s attitude toward
herself, and she had come to believe in him, passionately.
Nevertheless, Westcott’s efforts had awakened in her a keen interest
in Helen.
“I expect you are on the same errand as myself,” the girl was
saying, determined not to be repulsed. “Mrs. Joe keeps all the girls in
her reboso.”
She spoke in Spanish, that the Indian woman might not feel left
out of their talk, and the latter smiled, toothlessly.
“My, no!” exclaimed Mrs. Hallard. “You don’t catch me taking on
girls to look after. I’m on the buscar for a boy.”
“And have you succeeded?”
“Not I! They ain’t lookin’ for work; not the bucks; an’ she wouldn’t
trust me with a girl, not even if I’d take one.”
She laughed, defiantly, and the young girl divined, instinctively,
that she did so because she was ill at ease. She stood looking at her,
wistfully.
Did Gabriel Gard really love this woman? Was she really coarse,
and hard, and vitriolic of tongue, as her father had said? It could not
be; or such a man could not care. There must be another side, and
shame be upon her, Helen Anderson, if she could not win it to the
surface.
“I wonder—” she began, with some hesitation. “Of course I don’t
know what you want, but Wing Chang, our cook, has a young cousin
—or something—visiting him. He came a few days ago, with some
teamsters from the mines. I think Chang does not want to take him
on. He was scolding about it, yesterday.”
The defiance was gone from Mrs. Hallard’s face, and a little look of
friendliness crept among its hard lines.
“Why, if he’s old enough to wait on table,” said she, “I dare say he’d
be just what I want.”
“Oh,” Helen replied, “I know that he can do that. He must be about
sixteen years old, and he has waited in restaurants.” She did not add
that that was one reason why neither she nor Chang cared for the
lad’s services. “Why can’t you ride back to the rancho with me and
see him yourself?” she asked, instead.
“Why, I’d take it right good of you if I could,” Kate Hallard said,
after a moment’s hesitation. Mrs. Old Joe had departed to find the
mother of Jacinta’s prospective handmaiden, and they were speaking
English.
“’Tain’t no meanness in me that won’t have a girl round,” she
added, as if wishing to set herself right with her hearer, “but I want
some one to sling victuals, at the grille, an’ I can’t have any half-
baked girl-squaws round. Men’s devils; I can’t look after them an’
girls too.”
“Oh!” Helen spoke in impulsive protest, and Mrs. Hallard’s laugh
was hard again.
“You don’t believe what I said about men, I guess,” she said, and
Helen answered very simply:
“Of course not; it couldn’t be true you know, so long as women are
not—what you said.”
“I ain’t so sure about the women—not most of ’em—” Mrs.
Hallard’s handsome face wore a sneer now.
“Anyway,” she argued, “they’s plenty of ’em doin’ their share o’ the
devil’s business in the world.”
“But there are good men,” Helen persisted, “and good women,
too.”
“Right you are about there bein’ some,” was the reply; “but I draw
the line at there bein’ many. I’ve lived in this world thirty years,
nearly, child, an’ I ain’t found such a lot. I know one good man
though.”
Her face softened, and at the sight a thrill stirred Helen’s pulses.
She felt sure that Mrs. Hallard was speaking of Gard. There was
softness under that hard shell after all.
Before she could say anything more, however, Mrs. Old Joe
returned to the hut with the Papago girl and her mother, and she set
her mind to the faithful performance of Jacinta’s errand. It was
quickly arranged that the handmaiden should be brought at once to
the Palo Verde, and the matter completed, the two white women rode
away together.
A soft wind was blowing across their faces; a wind full of the
essential odor of the desert: impalpable, a little acrid, bracing withal,
and subtly suggestive of mystery, and of vastness. Helen threw back
her head, yielding to the desert spell.
“Oh!” she cried, “this is the place to be, after all. Don’t you feel so
about it?” she demanded of her companion.
“I don’t know,” Kate Hallard was watching her, puzzled. “I never
was away from it. Sometimes it makes me ache.”
“Ache?” It was the girl’s turn to be mystified.
“Yes.” The woman could not have told why the hidden thoughts of
her heart suddenly became articulate at this girl’s invitation to
speech.
“It always seems to me as if the desert—wants something,” she
explained, hesitatingly. “I d’ know what ’tis, but the feeling’s there: a
sort of emptiness, as if it wanted to cry and couldn’t. Sometimes at
night, when I hear a burro ‘yee-haw,’ or a coyote howlin’, seems to
me like’s if, if the desert could cry that’s the kind o’ noise it would
make. It’s like lonesome women—if there’s any sense in that!” she
added with a half-ashamed laugh.
Helen’s heart was full of sympathy that she felt was but partially
understanding. So this was what the desert had brought to this hard-
seeming woman. She had a sudden sorry realization that the
marvelous waste had never told its ache to her, dearly as she loved it,
and with the realization came the knowledge that the woman beside
her understood because she had truly lived and suffered in it. It came
to her to wonder if Gard had ever felt the ache of the desert.
“Do you ever want to get away from it?” she asked, softly.
“I d’ know,” her companion considered.
“I ain’t never known what anything else is like,” she finally said,
helplessly, “but seems to me you git to feel like’s if you was part of
the desert, an’ something would break if you got too far off.”
Ah! That Helen knew. She had hungered for the desert, even if she
had never ached with it.
“It’s the place of places for me,” cried she, taking off her hat and
letting the wind stir her hair.
Kate Hallard studied her, wonderingly. She had known few women
in her life; never before so youthful a one. She wondered what
Gabriel Gard had thought of this girl.
“Mr. Gard’s at the rancho ain’t he?” she asked, and Helen’s cheek
paled for an instant. The older woman noted the fact with a fierce
little pang.
“He went back to Sylvania this morning,” Helen answered, and the
other looked her surprise.
“I didn’t suppose he’d git away so quick,” she said. “Sandy Larch
was in yesterday an’ said he was in for another week. If I’d known he
was comin’ in I wouldn’t a’ gone off,” she added, and a sense of the
desert’s ache crept into Helen’s own heart.
Yes: Mrs. Hallard was right: it was a lonely place.
Arrived at the Palo Verde, the girl called Wing Chang, telling him
the business of the moment, and directed him to send in his young
relative. Then she took Mrs. Hallard to her own room, a big, low-
ceilinged place, with wide windows looking out toward the far
mountains. Kate gazed about her wistfully. She had seen few
women’s rooms in her lifetime.
This one was the sort of composite suggestion of dear girl and nice
boy that the modern college girl’s room is apt to be. Cushions
blazoned with the initials of Radcliffe and of Harvard heaped a couch
covered with the skin of a mountain lion that Helen herself had shot.
Among the pretty trifles on the dresser was a practical-looking little
revolver, and from one of the two hooks that held her light rifle hung
an illumined panel bearing the arms of Radcliffe. A cartridge-belt
hung from another hook, and beneath it, on a stand, lay a bit of
dainty embroidery which she had been working on that very
morning.
Beside it was a fat little book bound in age-yellowed vellum. Kate
Hallard picked this up and glanced through it, curiously.
“Is this Chinese?” she asked, bewildered.
Helen explained that it was Greek, and the woman laid it down
with a weary little laugh.
“I ain’t never been out’n the territory, as I said,” she explained, half
defiantly. “Men’s about the only books I ever read, an’ Lord! they’re
mostly writ plainer’n that.”
“I haven’t known many,” Helen answered, “except my father—and
one or two others.”
“One or two’s likely to be samples o’ the rest,” the other remarked,
carelessly. “I suppose you know an awful lot?” she continued,
glancing at Helen’s book-shelves. She had never before seen so many
books together.
“I know just enough to realize that I am dreadfully ignorant.”
Helen’s face was troubled; the older woman yearned toward her. She,
alas! could think of nothing in her own experience that was likely to
be of use to the girl.
Wing Chang’s cousin just at this instant appeared, silently, in the
doorway.
“Oh, Lee,” Helen cried; “Mrs. Hallard wants to see you.”
“Chang say come,” the boy replied, “I come quick’s could. Me velly
good waiter boy,” he added without preamble, turning to Kate
Hallard. “Thinkee takee your job.”
“Land sakes!” laughed she; “he’s none so slow, is he?”
“Can you wait on customers as prompt as all that?” she asked of
the boy.
“Me velly good boy,” he repeated, gravely, “makee hash fli allee
same like hellee.”
“Lee!” Helen looked shocked. “You should wait to see whether
Mrs. Hallard wants you,” she finished, rather tamely.
Lee looked at her in surprise. “No can help,” he announced,
conclusively, “China boy velly scarce; no can get many; him got take
me; one velly good boy.” He glanced again at Mrs. Hallard.
“I go get clo’,” he concluded, imperturbably. “Go skippee Sylvania.
See you later.”
He was gone, without circumlocution, and Helen surveyed her
visitor a little helplessly. “I’ll have Chang talk to him,” she said.
“No need,” laughed the other. “But my! He’s sure something of a
hustler, that boy. I reckon I’d better hit the trail or he’ll be runnin’
the grille before I git to it.”
“Do you really think he will do for you?” Helen was somewhat
dismayed.
“Sure,” was the reply. “He’ll do first rate. He means well; don’t I
know Chinks?”
“You have to take ’em the way they mean,” she added,
philosophically. “That’s the way to git along with ’em.”
“You seem to know a great deal,” murmured Helen, wistfully. She
felt somehow very young and inexperienced.
“I suppose you’ll see Mr. Gard when you get home,” she added,
tentatively. “We—that is—Father was afraid he ought not to go so
soon—on account of his foot. We hope it will be all right.”
Again Kate Hallard crushed down the little pang that would come.
“Mr. Gard, he took hold of a little piece o’ business for me...” she
spoke very casually, “I reckon it’s bothering him a lot. I expect he
wants to get done with it an’ git away from here. He’s been mighty
kind about it.”
“Oh! He would be that.” Helen could not have explained why her
heart seemed suddenly lighter. She was conscious of a quick, friendly
feeling toward this woman of the desert.
“You’ll come again to see me, won’t you?” she asked, detaining her
guest when the latter had swung to the saddle.
Kate Hallard hesitated. “I reckon I can’t git away from the grille
much,” she said, evasively. “I never go nowhere much.”
The girl’s instinctive wisdom prompted her not to press the point
then. She would let it wait, but her wistfulness sounded in her voice
when she spoke again.
“At any rate we’re friends, are we not?” queried she, looking up
into the black eyes.
They returned her gaze with a sudden glisten, as of ice-bound
pools when Spring has touched them. In their fundamental honesty
the two natures stood for the moment upon common ground.
“Friends.” Kate Hallard drew a long breath as she took up her
bridle-rein. “Child,” she said, “if the friendship of a woman like me is
ever any use to you, it’s yours while there’s a drop o’ blood in my
heart,” and ere Helen could make answer she was well down the
avenue toward the great gate.
CHAPTER VII
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